As we previously reported, a federal district court in Philadelphia recently struck down the provision of Philadelphia’s salary history ban prohibiting employers from asking about salary history (the “inquiry provision”), but upheld the provision of the law prohibiting employers from relying on such information (the “reliance provision”). The law was initially scheduled to take effect May 23, 2017, but had been stayed by the district court pending resolution of the Philadelphia Chamber of Commerce’s challenge to the law. The Judge’s decision ostensibly resolved the litigation at the district court level, however, both the Chamber of Commerce and the City of Philadelphia have appealed the ruling to the Third Circuit Court of Appeals. The Third Circuit has not yet issued an order staying the reliance provision, which the district court upheld. We therefore caution Philadelphia employers to act as though the reliance provision is in full effect, and to refrain from relying on salary history information in determining employees’ compensation. We will continue to report on the appellate process as it unfolds.
On April 30, 2018, a federal district court issued a long-anticipated ruling on Philadelphia’s salary history ban. The ban, scheduled to take effect May 23, 2017, has two parts: (1) the “Inquiry Provision,” precluding employers from inquiring about a prospective hire’s wage history; and (2) the “Reliance Provision,” prohibiting employers from relying on the wage history of a new employee in determining the employee’s pay, unless the employee “knowingly and willingly disclosed his or her wage history to the employer.”
Last week, District Court Judge Mitchell Goldberg granted the City of Philadelphia’s Motion to Dismiss the Philadelphia Chamber of Commerce’s lawsuit challenging Philadelphia’s controversial new pay history ordinance. As we have discussed previously (see Here’s What that New Philadelphia ‘Pay History’ Law Means for Your Business and Philadelphia Wage Equity Ordinance On Hold … For Now), the ordinance would make it unlawful for an employer to inquire about a job applicant’s pay history and would severely restrict an employer’s ability to base a new hire’s initial pay on his or her compensation history. The ordinance had been scheduled to go into effect on May 23, but was stayed by Judge Goldberg, with agreement of the City, pending resolution of the City’s motion to dismiss the Chamber’s lawsuit challenging the ordinance.
Judge Goldberg’s decision is likely not the last word however, as it did not address the merits of the ordinance. Rather, the Court held that the Chamber, because of the way the lawsuit was worded, did not have standing to challenge the ordinance, and it gave the Chamber until June 13, 2017 to file an amended complaint to cure those deficiencies. The Chamber is now expected to do just that.
Philadelphia is poised to strengthen the enforcement powers of the Philadelphia Commission on Human Relations (“PCHR”), the City’s primary civil rights and anti-discrimination agency. Under legislation that passed City Council on May 8, 2017, the PCHR would have the authority to issue cease and desist orders—closing a business’s operations for an unspecified length of time—if the agency determines the business has engaged in “severe or repeated violations” of the Philadelphia Fair Practices Ordinance (“the Ordinance”). The authority to shut down a business’s operation is an unheard of remedy for employment related civil rights violation and—given the significant ramification for employers—it is critical for Philadelphia employers to be aware of the potential consequences of the PCHR’s enhanced powers for their business operations.
Earlier this year, Philadelphia became the first city to pass a law prohibiting employers from inquiring about a job applicant’s wage history and restricting their ability to consider wage history in setting new employee compensation. The pay equity ordinance was enacted to halt the perpetuation of gender discrimination in compensation practices.
As has been widely reported, the Philadelphia Chamber of Commerce filed a lawsuit on April 6, 2017 to challenge the ordinance, which was scheduled to go into effect on May 23, 2017. The Chamber also filed a motion for a preliminary injunction, asking the Court to enjoin the enforcement of the ordinance while its lawsuit is pending, on the grounds that the ordinance violates businesses’ free speech rights under the First Amendment and is unconstitutionally vague. The City of Philadelphia’s apparent first response has been to question whether the Chamber of Commerce even has standing to bring a lawsuit challenging the ordinance.